Gold bounces-off monthly 10-MA, will the rebound last?

Gold takes on the recovery from four-month troughs in the Asian session this Wednesday, with the bulls offered some respite from the ECB taper talks-driven euro rebound.

Gold back above $ 1270

Currently, gold trades +0.48% higher at fresh session highs of 1274.32, recovering sharply from 1268.13, session lows. Gold is seen reversing a part of yesterday’s extensive sell-off as the USD bulls take a breather and allow a minor correction the USD index, which now drops  -0.14% to 95.97.

While the bullion found solid bids at the monthly 10-SMA, which prompted a minor-recovery towards $ 1275 this session. Moreover, ECB taper talks led to a solid rebound in the EUR across the board, lending some support to the ongoing recovery in gold.

The bullion witnessed a massive $ 46 sell-off on Tuesday, marking the biggest daily drop so far this year, after the US dollar jumped to fresh three-month highs against its major peers, in response to increasing calls for a Fed rate hike in Dec, spurred by upbeat US factories data.

Moreover, huge stops were triggered below a break of 1300 – key psychological levels, giving way to further sell-off to four-month lows struck at $ 1266.50.

Focus now remains on the US payrolls data due later on Friday, which will shape up the next direction in gold. In the meantime, investors will eye the US ADP jobs and factory orders data for further momentum.

Gold Technical Levels                                   

The metal has an immediate resistance at 1280 (round number) and 1298.47 (5-DMA). Meanwhile, the support stands at 1266.50 (monthly 10-DMA) below which doors could open for 1258.48 (200-DMA).